Now Is The Time To Reorganize The Financial System
World-wide, central banks are bailing out worthless financial assets held by the City of London and Wall Street --this in a midst of a pandemic of global suffering, and, in the developing sector of the world and impoverished areas right here in the U.S., almost certain death.
To see how these maniacs think just look at the investment article today by the “formidable Wall Street figure” and Davos raconteur Scott Minerd, billionaire CEO of Guggenheim Investments, who told his clients COVID-19 is going to devastate the developing countries—which he calls, in the customary contemptuous finance-speak, “emerging markets” or just “EMs.”
“The emerging markets soon will be hit very hard by the global pandemic,” Minerd wrote. “The pandemic will be followed by goods and ood shortages, and social unrest. Before the virus hit them directly, EM countries had already been adversely affected by falling commodity prices and the economic impact of the shutdown in China and other parts of the developed world. Most EM countries have very weak healthcare systems, nowhere near enough hospital beds and respirators, crowded cities and slums, and large numbers of workers in the economy who are paid daily wages or work in the informal economy and can’t work remotely. For many EM countries, this pandemic will quickly escalate from a health crisis to a humanitarian crisis, and ultimately to a solvency crisis. Political stability will be the last domino to fall.”
And Minerd then goes on from there to advise clients on the relevant Investments in the ravaged developing sector!
The threat of very large numbers of people dying in the developing countries is real for those people—and for us. But for Wall Street and the City of London-centered banks: They’re getting bailed out, from an admitted, complete collapse of the monetary system they have played for 50 years. The Federal Reserve is printing $5 trillion so far, under the aegis “unlimited,” to purchase bad assets from and lend money to speculative financial firms, while offering one-third of that in loans to municipalities and other businesses.
Another author today, Jonathan Tepper, CIO of Prevatt Capital, tells the actual story, criticizing the FED in, of all places, the Financial Times of London:
“Lending to potentially insolvent companies is bad enough, but buying corporate bonds and ETFs in the secondary market is of questionable legality under Section 13 of the Federal Reserve Act.... It also does nothing to help fund the economy, and merely helps the returns of investors who have already bought corporate bonds. It is a paradise for speculators.
“The obvious beneficiaries of the junk bond-buying program are overleveraged private equity groups and unhealthy borrowers. This is not surprising. [Fed Chairman Jerome] Mr. Powell spent years at Carlyle, the private equity giant,” Tepper notes.
Meanwhile Americans under unprecedented mass unemployment get $1,200 each. They get to postpone their mortgage and tax payments but must make a balloon payment later—while Capital One bank is told by regulators it simply need not pay a $1 billion margin call on its derivatives losses at all. So, the injustice to the developing sector of the world is also in force for the American and European populations, where minority citizens with generally poorer lifetime healthcare, and the elderly, fill 80-90% or more of the death rolls from COVID-19.
The floating-exchange-rate, casino monetary system of the past half century, which has produced flagrant wealth, real wage losses and poverty, and widespread Malthusian views of human life, is now a wreck. But the central banks led by the Fed insist they’ll repair it. “We can prevent deflation!” Fed Vice-Chair Richard Clarida swore today. If they do, it will be with a deadly hyperinflationary explosion.
This rotten-ripe system, which the population rightly hates, can be replaced completely by a new credit system of the leading technological powers acting in concert, beginning by building a world health system which can prevent mass death in the developing countries. This new system will be presaged by the international conference of the Schiller Institute to be held online April 25-26.